AfrAsia deal signals major indigenisation climb down

Published: 25 April 2014

This week's announcement Mauritius-based Afrasia Bank Ltd has increased shareholding in AfrAsia Zimbabwe Holdings Limited to 62,5% , following the injection of an additional $20 million into the entity is a clear indication that government has realised the futility of a one-size -fits-all approach in its indigenisation drive, analysts have said.

The injection of $20 million into the local financial institution comes on the heels of the recently acquired ABC Holdings majority stake by international investor Atlas Mara.

A Russian investor who is interested in acquiring Tetrad Investment Bank is reportedly locked in delicate negotiations to take over Tetrad.

This comes after both President Robert Mugabe and Finance minister Patrick Chinamasa said a sartorial approach will be taken towards implementation of the indigenisation policy as opposed to a one size fits all solution.

Former Economic Planning minister Tapiwa Mashakada said approval of Afrasia's transaction is a sign government has realised the futility of the one size fits all approach which called for a 51% local stake in all foreign enterprises.

"I had warned them as minister of Economic Planning that we needed a pragmatic approach when it comes to the indigenisation policy," said Mashakada who is also economist.

Mashakada pointed out "Having 51% shareholding across the board will not work and I am happy that they are beginning to realise this."

He called for the indigenisation law to be amended to reflect the flexibility of the shareholding structures in various sectors.

Economist Eric Bloch said although this was a welcome development, there was need for the National Indigenisation Economic Empowerment Board (Niebb) to implement what had been recently pronounced by Mugabe and Chinamasa.

He said the easing of indigenisation requirements of 51% shareholding across all sectors have been prompted by the debilitating cash crunch that has hit the economy and the need for investment to halt the increasing retrenchments and company closures.